China's 2,600-year-old agricultural tax will no longer exist as of next January 1 after the country's top legislature voted Thursday to abolish it, state media said.
The decision was taken at a meeting of legislators from the National People's Congress, Xinhua news agency reported. The congress rubber-stamps decisions made by the ruling Communist Party, The government has long talked about scrapping the tax to raise rural incomes and narrow the wealth gap with the cities, to increase consumer spending in the countryside and to spur continuous economic growth.
The move is also indicative of the fact that the economy relies less on agriculture and the government can generate revenue through other sectors.
Agriculture contributed 13.1 percent of gross domestic product in 2004, while the industrial and tertiary or service sectors contributed 46.2 percent and 40.7 percent respectively.
The agricultural tax is China's most ancient levy and was first collected in 594 BC. It had existed since then.
Most provinces had already begun scrapping the tax in recent years on an experimental basis but all the provinces will now have to do so by January 1.
The move is not expected to have a big impact on government revenues although it will benefit the country's 800 million farmers.
Farmers, however, have complained that the tax is only a small sum compared to the wide range of other fees levied by rural officials.